BRCM Entrance to Crowded LTE Market No Threat to QCOM, Says Town Hall

By Tiernan Ray

Town Hall Investment Research’s Jamie Townsend this morning opens that wireless chip makers Qualcomm (QCOM) and Sequans (SQNS) are “attractive companies based on the emerging market for LTE baseband chips.” He thinks that newcomer Broadcom (BRCM) will have an uphill battle to dethrone Qualcomm from the so-called multi-mode category of chips for long-term evolution, or LTE cellular connections.

One of the LTE Baseband wannabes, Broadcom has announced that it is sampling an LTE baseband chip set that it was able to develop through its acquisition of Beceem over two years ago. With this new product not expected to ship in products until 2014, we do not see it as significantly impactful, especially in the shorter term […] The LTE baseband semiconductor market can be broken into two groups, multi-mode and single-mode LTE. With the LTE market still in its early stages, most larger chip vendors are focusing their development efforts on multi-mode chips that can work in a 2G/3G/4G environment. This makes sense since the vast majority of mobile handsets and devices are currently being sold into carrier markets where the LTE network is either still in its infancy or yet to be built. There are already 36 LTE multi-mode baseband solutions in the market with Broadcom’s BCM21892 GSM/WCDMA/LTE modem being the most recent addition. According to ABI Research, Broadcom’s new product “ is a competitive solution in terms of size, node process, Release 10, Category 4, and its support of 2G/3G/4G including TD-SCDMA and both modes of LTE. By the time this product enters the market, however, an even larger range of integrated solutions will have application processors and baseband processors with or without wireless connectivity.

In contrast to Qualcomm, Sequans focuses on the single-mode LTE market, notes Townsend.

Townsend’s note is a contrast to a piece last week by RBC Capital’s Doug Freedman, who wrote that its chips could finally help it land some work with Apple (AAPL) and push Qualcomm out of the iPhone slot.

Broadcom shares today are own 12 cents at $34.98, Qualcomm shares are down 14 cents at $65.53, and Sequans shares are up a penny at $1.61.

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